by Calculated Risk on 2/01/2013 04:00:00 PM

Based on an estimate from AutoData Corp, light vehicle sales were at a 15.29 million SAAR in January. That is up 10% from January 2012, and down slightly from the sales rate last month.

This was at the consensus forecast of 15.3 million SAAR (seasonally adjusted annual rate).  

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for January (red, light vehicle sales of 15.29 million SAAR from AutoData).

Click on graph for larger image.

This is a solid start to the new year.    After three consecutive years of double digit auto sales growth, the growth rate will probably slow in 2013 - but this will still be another positive year for the auto industry.

Even if sales average this rate all year, sales would be up about 6% from 2012.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate.

This shows the huge collapse in sales in the 2007 recession, and that sales have increased significantly from the bottom.

by Calculated Risk on 2/01/2013 02:31:00 PM

Catching up ...

There are a few key themes:
1) Private residential construction is usually the largest category for construction spending, but there was a huge collapse in spending following the housing bubble (as expected).  This is now the largest category once again.  Usually private residential construction leads the economy, so this is a good sign going forward.

2) Private non-residential construction spending usually lags the economy.  There was some increase this time, mostly related to energy and power - but the key sectors of office, retail and hotels are still at very low levels.

3) Public construction spending has declined to 2006 levels (not adjusted for inflation).  This has been a drag on the economy for 3+ years.

The Census Bureau reported that overall construction spending increased in December:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during December 2012 was estimated at a seasonally adjusted annual rate of $885.0 billion, 0.9 percent above the revised November estimate of $876.9 billion. The December figure is 7.8 percent above the December 2011 estimate of $820.6 billion.

The value of construction in 2012 was $850.2 billion, 9.2 percent above the $778.2 billion spent in 2011.

Private construction spending increased, but public construction spending declined:

Spending on private construction was at a seasonally adjusted annual rate of $614.9 billion, 2.0 percent above the revised November estimate of $602.9 billion. ...

In December, the estimated seasonally adjusted annual rate of public construction spending was $270.1 billion, 1.4 percent below the revised November estimate of $274.1 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending is 54% below the peak in early 2006, and up 39% from the post-bubble low. Non-residential spending is 26% below the peak in January 2008, and up about 35% from the recent low.

Public construction spending is now 17% below the peak in March 2009 and at the lowest level since 2006 (not inflation adjusted).

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is now up 24%. Non-residential spending is up 8% year-over-year mostly due to energy spending (power and electric). Public spending is down 6% year-over-year.

This was a fairly strong report - except for public construction spending - and this report suggests an upward revision to Q4 GDP.

All Housing Investment and Construction Graphs

by Calculated Risk on 2/01/2013 12:25:00 PM

First, here is a table of the change in payroll employment on an annual basis including the benchmark revision released today. For private employment, 2011 was the best year this decade (2012 was the 3rd best year), but public payrolls have seen a four year decline:

Annual Change Payroll Employment (000s)
	Private	Public	Total
2001	-2,308	551	-1,757
2002	-765	233	-532
2003	104	-42	62
2004	1,872	147	2,019
2005	2,298	186	2,484
2006	1,862	209	2,071
2007	827	288	1,115
2008	-3,797	180	-3,617
2009	-4,976	-76	-5,052
2010	1,235	-213	1,022
2011	2,420	-317	2,103
2012	2,247	-77	2,170

The headline number for January (157 thousand jobs added) was below expectations, and the unemployment rate was higher than expected.  However the revisions (benchmark and new seasonal factors) were positive.  The unemployment rate is from the household survey, and the household survey was weak - but that survey is very volatile. 

Hopefully employment growth will pick up some in 2013, although austerity probably means another year of sluggish growth.  Below are a several more graphs ... The first graph below shows the employment-population ratio for the 25 to 54 age group. This has been moving sideways lately, and that shows the labor market is still weak.

Employment-Population Ratio, 25 to 54 years old

Click on graph for larger image.

Since the participation rate has declined recently due to cyclical (recession) and demographic (aging population) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the employment-population ratio for this group was trending up as women joined the labor force. The ratio has been mostly moving sideways since the early '90s, with ups and downs related to the business cycle.

This ratio should probably move close to 80% as the economy recovers. The ratio decreased in January to 75.7% from 75.7% in December. This has generally been trending up - although the improvement stalled in 2012 - and the ratio is still very low.

Percent Job Losses During Recessions


This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at maximum job losses.

In the earlier post, the graph showed the job losses aligned at the start of the employment recession.

This financial crisis recession was much deeper than other post WWII recessions, and the recovery has been slower (the recovery from the 2001 recession was slow too). However, if we compare to other financial crisis recoveries, this recovery has actually been better than most.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons, at 8.0 million, changed little in January. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of part time workers increased in January to 7.97 million from 7.92 million in December.

These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 14.4% in December.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 4.71 million workers who have been unemployed for more than 26 weeks and still want a job. This was down slightly from 4.77 million in December, and is at the lowest level since June 2009. This is generally trending down, but is still very high. Long term unemployment remains one of the key labor problems in the US.

State and Local Government

This graph shows total state and government payroll employment since January 2007. State and local governments lost 129,000 jobs in 2009, 262,000 in 2010, and 239,000 in 2011. In 2012, state and local government employment declined by 32,000 jobs.

In January 2013, state and local governments lost another 4,000 jobs.

It appears most of the state and local government layoffs are over, however state and local government employment is still trending down slightly.

Of course the Federal government layoffs are ongoing with another 5,000 jobs lost in January.

Overall this report suggests sluggish employment growth in the private sector.

All Employment Graphs

by Calculated Risk on 2/01/2013 10:00:00 AM

Note: I'll have much more on the employment report soon.

The ISM manufacturing index indicated expansion in January. PMI was at 53.1% in January, up from 50.2% in December. The employment index was at 54.0%, up from 51.9%, and the new orders index was at 53.3%, up from 49.7% in December.

From the Institute for Supply Management: January 2013 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in January for the second consecutive month, and the overall economy grew for the 44th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

Click on graph for larger image.

Here is a long term graph of the ISM manufacturing index.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI™ registered 53.1 percent, an increase of 2.9 percentage points from December's seasonally adjusted reading of 50.2 percent, indicating expansion in manufacturing for the second consecutive month. The New Orders Index registered 53.3 percent, an increase of 3.6 percent over December's seasonally adjusted reading of 49.7 percent, indicating growth in new orders. Manufacturing is starting out the year on a positive note, with all five of the PMI™'s component indexes — new orders, production, employment, supplier deliveries and inventories — registering above 50 percent in January."

This was above expectations of 50.7% and suggests manufacturing expanded in January.

Final consumer sentiment for January:

The final Reuters / University of Michigan consumer sentiment index for January increased to 73.8 from the preliminary reading of 71.3, and from the December reading of 72.9.

This was above the consensus forecast of 71.5. There are a number of factors that can impact sentiment including unemployment, gasoline prices and other concerns - and, for January, the payroll tax increase and more. The slight improvement might be related to relief that politics didn't damage the economy.

by Calculated Risk on 2/01/2013 08:32:00 AM

From the BLS:

Total nonfarm payroll employment increased by 157,000 in January, and the unemployment rate was essentially unchanged at 7.9 percent
...
The change in total nonfarm payroll employment for November was revised from +161,000 to +247,000, and the change for December was revised from +155,000 to +196,000

[Benchmark revision:] The total nonfarm employment level for March 2012 was revised upward by 422,000 (424,000 on a not seasonally adjusted basis).

Click on graph for larger image.

The headline number was below expectations of 185,000. However employment for November and December were revised up sharply.

The second graph shows the unemployment rate.

The unemployment rate increased slightly to 7.9% from 7.8% in December.

The unemployment rate is from the household report and the household report showed only a small increase in employment.


The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate was unchanged at 63.6% in January (blue line. This is the percentage of the working age population in the labor force.

The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although a significant portion of the recent decline is due to demographics.


The Employment-Population ratio was also unchanged at 58.6% in January (black line). I'll post the 25 to 54 age group employment-population ratio graph later.


The fourth graph shows the job losses from the start of the employment recession, in percentage terms, compared to previous post WWII recessions. The dotted line is ex-Census hiring.

This shows the depth of the recent employment recession - worse than any other post-war recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.

This was another sluggish growth employment report, but with strong upward revisions to prior months.  I'll have much more later ...